Things we didn’t predict: Chief Justice John Roberts joins the four left-of-center justices in writing the majority opinion upholding the Patient Protection and Affordable Care Act. Why? Because the penalty that anchors the individual mandate is actually a tax.
We ran a great, concise explainer on what happened this morning. An excerpt:
The law’s most controversial component, known as the “individual mandate,” requires all Americans to purchase health insurance or pay a “shared responsibility payment” to the government.
On the day the law was enacted, 26 states, several individuals, and others sued to have the law struck down as a violation of the Constitution’s Commerce Clause, which gives the federal government the power to regulate commerce between the states.
In its ruling, the court held that the law could not be upheld under the Commerce Clause, which was the government’s primary argument in its support. “The Federal Government does not have the power to order people to buy health insurance,” Roberts wrote for the majority.
But wait—doesn’t that mean the law should’ve been struck down?
The Commerce Clause argument was only one of three the government made in support of the law. It also argued that the law could be considered a tax, and this is the argument the court bought.
Specifically, the court held that the individual mandate is not a “penalty,” as the health-care law identified it, but a tax, and therefore a constitutional application of Congress’s taxation power.
While I don’t want to get too political here (and not that I am elsewhere, I don’t think), Here’s my understanding:
The problem here is making a healthy 30 year old buy health insurance who otherwise wouldn’t. If you read Jonathan Cohn’s amazing piece “How They Did It” (which you should totally instapaper if you haven’t) about the passing of the Affordable Care Act, you’ll see that Obama and the Democrats were forced politically to call the making the 30-year-old buy insurance a “mandate” rather than a tax. This was the case simply because they couldn’t get anything with the word “tax” passed Congress. Thus the mandate.
Today’s ruling upheld the “mandate” not via the commerce clause, but through Congress’s right to tax (see photo). As we learn from Cohn’s piece, this of course is what Obama and co. knew all along— they just couldn’t call it that. Thus it seems the Court has straighten out this necessary but mangled political language. More from our explainer:
How can the court call the mandate a tax if the law itself didn’t call it that?
The court is not bound to interpret laws exactly as they are written, but uses what it calls a “functional approach”—considering the substance of a law in addition to its formal language.
Under this approach, the court ruled that the penalty the law imposes on people who don’t buy health insurance “looks like a tax in many respects,” and that it is permissible under the court’s previous case law for several reasons: the amount of money due is “far less than the price of insurance” and it is collected by the IRS under normal means of taxation.
The court acknowledged that the mandate “is plainly designed to expand health insurance coverage,” and noted that “taxes that seek to influence conduct are nothing new”—for example, the taxing of cigarettes to discourage smoking.
Finally, the court reasoned, the mandate does not make the failure to buy health insurance unlawful. Beyond the payment to the IRS, the court explains, “neither the Act nor any other law attaches negative legal consequences to not buying health insurance.”
The one thing the Court did strike down was a move to expand Medicaid (medicine and shit for old people).
What’s that part about the Medicaid expansion?
The health-care law also expanded Medicaid to cover all nonelderly people with an income below 133 percent of the poverty line, and gave the government the authority to penalize states that choose not to participate in this expansion by taking away their existing Medicaid funding.
The court called this “economic dragooning” that leaves states with no option but to accept the expansion, and found that it violated the Constitution because states could not have anticipated such a dramatic restructuring of Medicaid.
However, the court found that the Medicaid expansion could be saved by removing the government’s authority to remove all of a state’s Medicaid funds if it chooses not to accept the expansion.
My colleague Ries wondered aloud if this would have any effect on the legal drinking age, which is determined by states, but was effectively forced to 21 by the federal government because they set it up so states who had the age lower than 21 wouldn’t get highway funding. This sounds a bit like the above-mentioned “economic dragooning.” (Sorry, I’m on my 3rd beer at this point.) I doubt this will actually have an effect on drinking ages across the country, but it is an interesting historical precedent that was seemingly forgotten or overruled today.